ConAgra Foods, Inc. announced today that it has reached an agreement to sell its commodity trading and merchandising operations conducted by ConAgra Trade Group to the Ospraie Special Opportunities fund and other investors for approximately $2.1 billion, subject to certain adjustments. The Ospraie Special Opportunities fund is an affiliate of Ospraie Management, a leading investment management firm focused exclusively on commodities and basic industries with approximately $9 billion under management. ConAgra Trade Group will be renamed Gavilon LLC upon completion of the sale.
Under the terms of the agreement, ConAgra Foods will sell the operations of ConAgra Trade Group, also known as the company's Trading and Merchandising segment, in exchange for approximately $1.6 billion in cash, subject to working capital fluctuations, and $525 million (face value) of payment-in-kind debt securities of a newly created Gavilon holding company. The weighted average interest rate on the debt securities is 10.82 percent. The final purchase price will be adjusted based on working capital changes subsequent to Feb. 24, 2008. In addition, ConAgra Foods will receive a contingent right to a portion of future earnings during the remainder of calendar 2008 and a warrant exercisable for 8 percent of the equity of the purchaser.
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